Can Taking a Big Picture View of ESG Bypass ESG Data Pitfalls?


Key Ideas

  • As you begin evaluating ESG investing, you must confront the challenges involving ESG data, including reliability, frequency, breadth, and depth.
  • Focusing on portfolio-level outcomes and stable ESG characteristics can help mitigate the effects from data shortcomings in achieving investor objectives.
  • A closer look at the data from a leading provider shows that even portfolios derived from simple filtering by individual stock ESG ratings can result in a stable score boost over time, and that the pillar ratings are largely independent of each other.